Case Study
Change Management in Ermenegildo Zegna

 

Introduction

This paper present a successful change management programs recently completed in Ermenegildo Zegna (“Zegna”). Some of the issues discussed include the following:

  • Change factors and driver analysis
  • The used change models
  • Design of new interaction structure
  • Active changing strategies (i.e., operational changing strategies)
  • Applied specific strategies (i.e., lessons learned from the case study)

 

Part 1: Change Factor and Driver Analysis

Prior to the change process, Zegna is a family owned business. The performance is deteriorating, given that business is affected by competitive pressures due to globalization process. In 2000, the management of the company was taken over by younger generation of family members (Tyler-Cagni & Hills, 2008). Apparently, the younger negation of senior management is more ambitious, and is committed to bring the firm to greater heights. External consultants and change agents are employed (namely, Lynda Tyler-Cagni and Jan Hills). Thus, apparently, one of the key factors leading to the change process in Zegna is due to change of management, whereby the new management is currently more ambitious, and obviously has the opinion that a change is required to bring the organization to better performance and greater profitability.

From the industry wide perspective, the fashion industry in Italy is facing increasing competitive business environment. The entire fashion industry in the country is undergoing a period of consolidation in the luxury market segment (Tyler-Cagni & Hills, 2008). From these statements, it is reasonable for us to believe that factors in external environment are pressing the firm to change. As the industry of luxury goods become more competitive, firms in the industry must adapt and evolve to suit the new environment (Colli and Merlo, 2007), for survival as well as for better performance in the future. As such, change is required in the organization to ensure that Zegna can remain competitive in the every challenging industry landscape. To understand the driving and restricting forces in the change process, Lewin’s Force Field Model is presented as in Figure 1 below:

 

Figure 1: Lewin’s Force Field Model

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Part 2: The Used Change Models

Nature of the Change Process

The objective of the change process is to transform Zegna into a high performing organization with a performance oriented culture (Tyler-Cagni & Hills, 2008). To do this, the management had identified several areas of change. These areas include: structure, skill and attitude, policies and systems, education of the customers as well as moving towards a more result oriented culture.

Level of the Change Process

The change process performed is executed at the organizational level. The entire organization is affected, all people working in the firm involved in the change process. As will be discussed in the following sections, the change process firstly involves only the HR department, but later is organized to change the entire organization, which includes Zegna business units in foreign countries around the world. According to Tyler-Cagni & Hills (2008), the duration of the entire change process took about 6 years. As such, the level of change can be categorized as ‘Gamma’, as the change process involves a paradigm shift.

Change Agents

According to Tyler-Cagni & Hills (2008), the newly appointed company group executive vice president, namely Lynda Tyler-Cagni (whom was previously an external consultant) was responsible in changing the company HR department from a previously traditional and transactional focused division into a business-oriented team. The transformed HR department later becomes the role model for the rest of the divisions in the organization. When the HR department is becoming more capable of handling emerging external threats and internal challenges, the department took over the role to influence and change the rest of the departments in Zegna.

Thus, another critical change agent in the change process is the HR department in Zegna. That department was leaded by Jan Hills, who is given the responsibilities to lead the transformation process in the other part of the organization. After the HR department is successfully transformed, they in turn acted as the business partner and change agent to lead the ultimate change programs in the firm.

Part 3: Operational Changing Strategies

Several approaches have been employed to successfully and effectively change Zegna into a performance oriented company. A study on the change process had identified several approaches employed by the senior management to change the culture of the organization. These approaches are outlined in the following paragraphs.

Hiring of external consultants. The change process is performed through the hiring of external consultants, namely Lynda Tyler-Cagni and Jan Hills to bring new fresh perspectives and ideas to the organization. These external consultants are appointed to work in the organization, and then to analyze the existing structure, culture, and policies of the firms, in order to formulate viable change programs for the firm. Several approaches were used in analyzing the scenario and situations in the organization during the consultation process. These approaches include: (a) surveys to understand the existing HR perceptions of the change program and the future – using Ulrich model, (b) face to face interviews on key managers in Zegna, (c) discussions with HR managers on how they could be transformed to involve in strategic business issues in organization, and (d) dialogues with the other staffs in the organization whenever it is necessary.

Engaging HR department as the business partner and change agent. The change process started with changing one of the key department in the organization, and then to use that department to change the other departments in the organization. HR department is selected, as that is the best possible move to change the organization. According to Tyler-Cagni & Hills (2008), prior to the change process, the company is managed through a paternalistic approach. It is the organization commitment to hire the most talented employees as well as to utilize their skills and talents effectively. As such, it is critical to firstly transform the HR function in the firm, before other workforce can be influence and changed. In the change process, HR was capable of affecting the employees from other divisions and then to support the organizational needs to change and to move towards a more result and performance oriented company.

Organizing workshop to re-educate the HR personnel. Re-education programs were organized to teach the employees from HR department on the necessary change and knowledge needed to transform themselves from a traditional and transactional HR department into one that able to support the strategic directions of the company. The programs are tailored to teach the employees on how to work under a more business focus approach. According to Tyler-Cagni & Hills (2008), several series of workshop had been launched for the purpose of re-educating the workforce. The subjects taught and discussed in the workshop include: (a) business planning (i.e., it is about discussions of new business missions and the respective challenges), (b) HR initiatives (i.e., it is about the identification of HR services that can support, facilitate and drive the growth of the business), (c) new skills and training, (d) new HR system, processes and skills, (e) measures of progress and lastly (f) adjustments or corrective actions to be taken if required.

Emphasizing on the potential benefits to be reaped from the change program. Besides, the benefits that can be reaped from the outcomes of the change process were communicated to the employees, through the re-education programs. The potential advantages or values to be reaped by the HR personnel by taking up new roles and responsibilities are communicated often, to ensure that these HR personnel can see the benefits bring to them by taking up new roles in the change process as in supporting the change process through HR functions. Thus, HR personnel is trained to learn the new ways, and then to serve as the role models for others in the firm to follow and learned from. When people can see the positive side of the change, they can focus on the positive points, and subsequently become more open minded and having better attitudes to participate and involve in the change process. This can provide great motivation for them to change, as contrast to resist changes when they do not understand the reasons that they must change, or when they perceive that change process may harm or hurt them in the future.

Working together with HR department, further execute the change programs to other departments in the organization. After the HR personnel are transformed and changed, line managers are then taught about the value and benefits to be reaped through the change process. At this point of time, HR personnel and department serve as the change agent, and the business partner of the consultants to change people in other departments. As the key line managers buy into the ideas on the needs to change, as well as understand the benefits and potential advantages to the organization from the change process, these benefits, ideas, and values are then delivered, communicated and transferred to other staffs in the respective departments. As a result, people now aware and understand the reasons they must change, and their doubts on the viability and ambiguity of the change programs can be cleared.

Emphasizing key ideas required for successful change program along the change process. Apart from that, it is also noted that the external consultants are found to constantly communicate several crucial ideas to people in the organization that can help to facilitate the change process. The key ideas communicated on a continuous basis include: (a) people need to have the courage to change, (b) stay focus on the change, and (c) change is an ongoing process. As a result, people become more open to change, and their resistance to change is lessening, as they were currently supported by the change agents. Instead of blaming others for the need to change, the now can take the change as something necessary, for them to move forward for a better future. With the awareness that change in an ongoing process, people inherently understand the hard work required in the process, and more persistent in working towards the successful implementation of change programs in Zegna.

Overall, the change strategies can be summarized using Kurt Lewin’s Ice Cube Model as in Table 1 below.

 

Table 1: Kurt Lewin’s Ice Cube Model

Present State Transition State Desired State
Unfreeze Change Refreeze
·         Crises – very competitive business environment.

·         Desires – senior management want to enhance Zega competency

·         Vision – becoming a more competitive and faster growth organization

·         Steps by steps

·         Engage external consultants

·         External consultants then engage HR department

·         The work together to slowly implement change: training, classes, communication, etc.

·         Gain results.

·         Continuously emphasizing the importance of performance oriented company

·         Growth of the firm – present evidences that they had already gain success

 

A study of the change process in Zegna revealed that the change process indeed was carried out in several stages. The first stage is the hiring of external consultants to act as the key change agent to kick start the change process in Zegna. External consultants were hired as one of the top managers in the organization. After that, a study of the organization is performed by the change agents. The initial change process was focused on changing the HR department in Zegna. After the HR department is changed, and had agreed to change the other staffs from other departments, HR department is managed as the change partner to facilitate change in the organization. To change the behaviors, mindset and processes in the other department, change agents had targeted their efforts on the line managers first. When the line managers bought into the change process, the change programs were then executed to all other employees in the firm.

In order to present a better view on the stages of the change process, the CONSULT model is presented in Table 2 as follow:

 

Table 2: CONSULT Model

Stages Details
Connect with an issue ·         Challenging business environment.

·         Need to become more performance oriented.

Open the doors ·         Hire external consultants – Lynda Tyler-Cagni
New understanding ·         External consultants do the research

·         Found out HR depertment is critical in the organization

Specify needed actions ·         After finish research, external consultant specify the plan, i.e., use HR department to help in the change process
Undertake needed actions ·         Engage HR department. Actions taken include: persuading, training, communication, and etc.
Locate gaps and opportunities ·         Ongoing solving the resistance to change.

·         Continuously findings ways to instill performance-oriented culture among the subsidiaries

Transfer knowledge ·         The external consultants stay in the firm as managers.

 

Part 4: Lessons Learned

The change strategies employed are mainly relying on the change agent. There are many lessons to be learned. Obviously, from a study on the change process implemented by Lynda Tyler-Cagni and Jan Hills, it is found that they possess several important skills and experiences that make the change process a success possible. The crucial skills and experiences contributing to the change process identified include:

Wide experiences in business management. Prior to joining Zegna, both the external consultants already were having wide experiences in business management. They were serving as senior management in other corporations. As they had been working on managerial position prior to taking the roles as change agents for Zegna, it is reasonable to expect that they are indeed experienced manager and understand the twist and turns of managing people and implementing effective change program in the context of a big corporations.

Managerial skills. As discussed before, the external change agents employed are having wide experiences prior to joining Zegna. Thus, it can be expected that they possess the relevant skills in managing businesses. Managerial skills such as planning, coordinating, facilitating, supporting, leading and managing employees and work flow in an organizational should not be something of huge challenges to them.

Communication skills. Ability to persuade others to change is crucial to any change process. As cited in Colli and Merlo (2007), one of the key reasons that the business transformation in Zegna was successful was because the change agents able to persuade the people in the organization to buy into the ideas that they need to change. Without good communication skills, it is not possible for the change agents to persuade the people to try out something new, particularly when these people are happy to stick with their previous roles and responsibilities (This is explicitly acknowledged by the change agent, as cited in Tyler-Cagni & Hills, 2008). Thus, we can easily deduce that the change agents are having excellent communication skills to talk to, and to persuade people to not to stay in status quo, and to take up new risks to move towards a new direction for better future.

An understanding on the requirement of change process. The entire business transformation and change process is performed smoothly, although it is also acknowledged by the change agents that the route was never smooth and easy. However, viewing from the difficulties of a change program, it is reasonable to deduce that the change agents understand the critical issues in successfully implementation of a change program. This is not hard to discern, considering the fact that the change process is carried out in sequence, and the change agents understand the delicate and complicated people management issues in Zegna – and successfully change the HR department and ultimately use the HR department as the change partner to properly carry out the change process in Zegna.

Ability to handle resistance to change. There were resistance to change in the organization but that were handled properly and effectively by the change agents. To handle the resistance to change, it is observed that the change agents had been stressing on the benefits to be reaped from the change process, constantly communicate with people in Zegna, support them when required, as well as to allow them to participate and involve in the change process.

An in-depth understanding on the industry. Possessing industry specific skills and certain degree of technical know-how is critical to the success of the change process. When the change agents had better technical competencies, it is more likely that people will believe in them, and then to buy into their ideas on the directions and methods to change.

Conclusion

The change process is a highly successful one. After the change process, the previously struggling firm is now performing in an excellent and profitable manner. According to the statistics provided by the change agents, as cited in Tyler-Cagni & Hills (2008), the business grow to a bigger corporations with 7500 employees (whereby 50% of these employees are based in Italy), and able to achieve a turnover rate of Euro 779.4 million in the year of 2006 (i.e., 6 years after the year 2000, where the change process is started).  Apart from the numerical and financial achievement obtained by the change agents, Zegna had also become a case study being referenced in academic research. The change process in Zegna is currently served as one of the success case study for researchers from the field of change management and business management to study. The success case study is cited in Human Resource Management International Digest, and is later quoted by Colli and Merlo (2007) in the discussion of best performing fashion corporations from Italy. Viewing from these facts, it can be concluded safely that the change process indeed is pretty successful.

Overall, it can be concluded that change management and successful implementation of a change process is never an easy task. Several guideline and requirements must exist before the change process can be effectively or successfully implemented. It is found that the successful change program in Zegna indeed followed systematic approaches to change. The change agents are also experienced and skillful. Many of the approaches employed are also consistent with theories suggested from change management literature. All these contribute to the success of that change process in Zegna. These present us a valuable case study and lessons to be learned from Zegna, and serve as good reference for managers that are about to implement change programs in their respective organization.

References & Bibliography

Anon. (2009). Business transformation at Zegna: human resources as a change agent. Human Resources Management International Digest, 17(3), 8-10.

Beardwell, J. & Claydon, T. (2007). Human Resource Management: A Contemporary Approach, (5th edn). Prentice Hall

Briscoe, D., & Schuler, R. (2004). International Human Resource Management 2e. Routledge: London.

Colli, A., & Merlo, E. (2007). Family business and luxury business in Italy. Enterprise Et Histoire, 46, 112-124.

Dessler, G. (2011) Human Resource Management ,12th edition,   Prentice Hall,

Legge, K. (2004). Human Resource Management: Rhetorics and Realities (Management, Work and Organisations), (Ed. Edition). Palgrave Macmillan.

McShane, S. L., & Von Glinow, M. A. V. (2010). Organizational Behavior: emerging knowledge and practice for the real world (5th Edition). McGraw Hill.

Robbins, S.P. (2005). Organizational Behavior, 11th edn, Pearson Prentice Hall, Upper Saddle River, NJ.

Tyler-Cagni, L., & Hills, J. (2008). HR leading by example during Zegna transformation. Strategic HR Review, 7(1), 22-27.

Wilson F.M. (2004) Organizational Behaviour and Work, Oxford, Oxford University Press.

 

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